The Hindu Business Line : Rupee up 9 paise; securities recover

MUMBAI: The rupee continued its upward trend for the third straight session, as it climbed to end at 44.02/03 on Wednesday against the dollar buoyed by strong FII inflows.

The currency finished nine paise stronger than its previous close at 44.11/12.

Although the domestic currency opened on a weaker note on account of a 25 basis point hike in the Fed rate and recovery of the dollar overseas; it regained lost ground during the latter half of the day, dealers said.

The stock market touching an all-time high to finish at 6,400 levels, and sentiment on the dollar being weak aided the rupee's rise, they added.

"The rupee's movement has been linked to cross currency movements lately, it is likely that the home currency will trade in a 30-40 paise range for the next few sessions," said a dealer at a private sector bank.

The forwards climbed higher, as the six-month forward closed at 1.88 per cent (1.82 per cent) and the one-year forward ended at 1.40 per cent (1.38 per cent).

Bond prices fell by nearly 50 paise from previous levels in the initial trading hours before recovering towards later part of the day, dealers said.

Yield on the 7.38 per cent 2015 paper moved up to 6.78 per cent before settling to close at 6.73 per cent at a price of Rs 105.95. The 7.55 per cent 2010 paper went up as high as 6.56 per cent to end lower at 6.47 per cent at a price of Rs 104.85.

A hike of 25 basis points in Fed rate and tightened liquidity conditions led to selling pressure in the morning hours. But expectation of a cut in domestic oil prices brought certain amount of buying interest later, dealers said. In the Rs 2,000 crore 91-day treasury bill auction cut-off yield was set at 5.40 per cent, substantially higher than previous cut-off at 5.15 per cent.

Call rates were in the range of 5-5.25 per cent.

Under the LAF window, RBI accepted all 6 bids aggregating Rs 1,865 crore. In the CBLO market, 99 trades worth about Rs 4,000 crore were transacted.